Evolutionary biologist here.

As the importance of killing wolves and foxes died down due to the rise of cities, territorial competition, and so on, dogs adapted to fit into new niches - thus hunting dogs, herding dogs, guard dogs, and so on. Obviously, this was largely human driven selection, but as a theoretical biologist I consider all selection to be essentially the same.

We eventually reached a point where dogs became more companions than utilities, although there was pair and family bonding all along the way. What I mean is that they frequently had fewer pragmatic jobs to do.

Combine that with the biological phenomenon of neoteny. That’s when an animal continues to express childlike characteristics into adulthood. Most domesticated dogs express neoteny, some to a greater degree than others. It’s not completely inaccurate to think of them as wolf puppies, but permanently. Interestingly, neoteny seems to be a side effect of breeding for human family compatibility (ie friendliness towards people).

Humans (and other mammals) also have a hardwired response to juvenile features, and it often triggers a caring response, so that became a second level but intense reinforcement of the toy breeds, for example.

Nah it’s the dogs fault for being too scary. We had to turn them into Pugs and Chihuahuas through selective breeding.